PERSPECTIVES

John Cusano QA: The customer experience is at the heart of digital transformation

Insurers’ perceptions of the effectiveness of their digital investments differ from those of their customers. What’s the reason for the gap?

John Cusano, Accenture’s Global Insurance Industry Lead, believes many insurers are underestimating consumer expectations when it comes to the digital customer experience. How can they better align their digital strategies with consumers’ demands?

Most insurers have invested heavily in harnessing digital solutions over the past couple of years. How are their digital strategies working out?
It depends on who you ask. A recent global survey by Forrester Consulting, commissioned by Accenture, found that 75 percent of insurers believe their digital customer experiences meet customer expectations. And 9 percent reckon they exceed expectations.

When I ask insurance executives how their digital strategies are panning out, they’re mostly happy because they don’t see any major gap with their competitors. They feel comfortable because they have committed substantial resources to their digital strategies and some have begun implementing impressive digital solutions.

Yet there remains a significant gap between the carriers’ perceptions and those of their customers. According to Accenture’s 2014 Global Consumer Pulse Survey, only 15 percent of consumers are satisfied with the digital experiences their insurers provide.

What are the reasons for these differing perceptions?
Perhaps they underestimate the high expectations of their customers. Expectations are no longer set by traditional insurance providers but by digital companies that offer consumers an array of flexible, personalized and on-demand services. We call them “experiential competitors” and they have set a high bar for all industries.

The Forrester research points to another reason for the perceptual disparity. Despite insurers’ confidence, only 14 percent of the respondents to this survey said they have mastered digital technology to the point that it differentiates them from their competitors.

If this is the case, carriers need to act fast. Their customers won’t wait long for them to improve their digital services. And there is no shortage of both traditional competitors and new ones from outside the industry trying to win them over.

Where should carriers begin in their efforts to close the perception gap?
Many carriers don’t have the necessary tools to tell them how they are performing, so putting in place metrics and measurement tools would be an immediate step in the right direction. It’s interesting to note that only a fifth of insurance respondents in the Forrester survey considered metrics and measurement to be a priority.

Of course, there’s nothing simple about measurement. Traditional single-channel metrics, which focus on a specific aspect of the business, are clearly not going to work. Insurers need to employ more complex cross-channel metrics that gauge digital performance across a wide range of customer interactions. Customer satisfaction, Net Promoter Score (NPS) and Customer Lifetime Value (CLV) are all useful indicators.

What are the major barriers that insurers face as they seek to harvest better return on investment from their digital strategies?
The Forrester research suggests that legacy technology, product and organization silos, and culture are some of the major obstacles that insurers will need to overcome to realize the full ROI of their digital investments. In addition to upgrading customer transactions and deploying new digital capabilities, they’ll need to focus on integrating and aligning digital technology throughout the business.

Insurers’ customers crave new-generation “living services.” They want to be able to choose from a bundle of highly flexible on-demand services that adapt to meet their changing needs and preferences. That means insurers need to think more like their customers and focus less on products.

Changing this picture will demand cooperation across the business. Who should lead the transformation effort?
Digital leadership has got to come from the top—right at the top. Digital transformation is not just about technology. It requires a complete reorganization of the whole enterprise—its people, systems, processes, products and partners as well as its technology and data resources. Such radical change can only be achieved by top leadership.

It cannot be done by chief information officers, chief digital officers or chief customer officers on their own. The CEO and the executive team have to set the vision, define the strategy and then oversee its implementation. There’s no doubt that that balancing digital transformation with the everyday demands of running a business and meeting stakeholder expectations is a major challenge. But this doesn’t change the fact that such executive involvement is a key ingredient for success.

You mentioned the concept of living services. How can insurers close the gaps in their offering to give customers the sort of bundled, on-demand services they expect?
To meet these expectations carriers must not only ramp up their investment in technology and skills, but also forge strategic partnerships that will be vital to their long-term future. These partnerships, and the ecosystems they enable, are becoming essential for delivering a broad range of related offerings.

The ecosystems could attract large numbers of consumers who are not yet insured. Alternatively, prospective partners could supply products and services that would enhance the quality of insurers’ ecosystems or increase their credibility with consumers.

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